Sequential excise valuation rules require Rule 6b(i) to be applied first, with penalty reconsidered after recalculation.

Assessable value under the Central Excise (Valuation) Rules, 1975 must be determined sequentially by first applying the proviso to Rule 6b(i), including any relevant abatements, adjustments, and nearest comparable price if available, before moving to Rule 6b(ii). The valuation exercise cannot bypass the earlier sub-rule and directly invoke the later one. Where recalculation of assessable value is required, reconsideration of penalty under Section 11AC of the Central Excise Act, 1944 may also follow as a consequential issue. The matter was remanded for fresh valuation in accordance with that sequence, with Rule 6b(ii) to be used only if no nearest price is available.

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Issues: Whether assessable value under the Central Excise (Valuation) Rules, 1975 was to be determined first under the proviso to Rule 6b(i) before resorting to Rule 6b(ii), and whether the matter required remand for fresh consideration of penalty under Section 11AC of the Central Excise Act, 1944.

Analysis: The assessable value dispute turned on the proper sequence of application of Rule 6b. The proviso to Rule 6b(i) had to be examined and given effect to first, including the relevant abatements or adjustments and the nearest comparable price, if available, before moving to Rule 6b(ii). The valuation exercise therefore could not bypass the earlier sub-rule and proceed directly to the later one. After recalculating the assessable value, the question of mandatory penalty and duty payment also required reconsideration in the light of the applicable precedents.

Conclusion: The matter was remanded to the original authority to reconsider valuation in accordance with Rule 6b(i) and to apply Rule 6b(ii) only if no nearest price was available, with consequential reconsideration of penalty under Section 11AC.

Ratio Decidendi: Valuation provisions under the Central Excise (Valuation) Rules, 1975 must be applied sequentially, and a later rule cannot be invoked without first giving effect to the preceding rule and its proviso where applicable.

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